Energy
Dictionary
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Energy |
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A service package supplied by a utility to customers in a newly-deregulated market which is provided to the customer as a transitional service while competition gets established in that market and customers learn about available competitive options. When markets are initially deregulated, there is usually one utility which serves all customers in a given territory (the incumbent utility), and this utility will be required to provide standard offer service for that territory until competition is firmly established in that market.
This service is usually offered in one of two ways. The utility may offer low rates in the beginning, either as a regulatory requirement or as a marketing device to keep new or existing customers. Over time, the standard offer rate rises to more profitable levels as the utility's competitors become established and able to compete on a level footing. Alternately, the utility may set the standard offer rate which is the same rate charged when the market was regulated and maintain that rate for as long as it remains profitable to the utility.
Utilities will usually retain standard offer services long after deregulation as a set of predefined packages or bundles they can offer new customers.
Generation charge is often used interchangeably with standard offer.
See also:
deregulation, unbundled services, generation charge, default service